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Wall Street down on signs of delay in corporate tax cuts

All three major indexes were on track to end lower for the week, with the S&P and the Dow on track to post weekly losses after eight straight weeks of gains. — Reuters picNEW YORK, Nov 10 — Wall Street edged lower at the open today hurt by signs of delay in corporate tax cuts until 2019, which may stall the market rally.

Senate Republicans have unveiled a tax-cut plan that would delay lowering corporate rate to 20 per cent by a year and provide small-business owners with a deduction rather than a special business rate.

The Senate Republicans’ version of the bill differs markedly on corporate, business and individual tax cuts from legislation detailed by their counterparts in the House of Representatives.

The S&P 500 index has surged more than 20 per cent since the 2016 presidential election, fueled by Donald Trump’s promises.

All three major indexes were on track to end lower for the week, with the S&P and the Dow on track to post weekly losses after eight straight weeks of gains.

The S&P 500 is trading at 18 times expected earnings, expensive compared with its 10-year average of 14.3, according to Thomson Reuters Datastream. Cutting corporate taxes would boost earnings and make stocks relatively less expensive.

“If the Senate version is elected, a market correction will follow and as the battle for tax reform intensify, stocks are likely to feel the pinch of a wobbly market,” said Peter Cardillo, chief market economist at First Standard Financial.

At 9:36am ET (1336 GMT), the Dow Jones Industrial Average was down 41.11 points, or 0.18 per cent, at 23,420.83, the S&P 500 was down 5.5 points, or 0.21 per cent, at 2,579.12.

The Nasdaq Composite was down 15.18 points, or 0.22 per cent, at 6,734.88.

Seven of the 11 major S&P sectors were lower, with the energy index’s 0.67 per cent fall leading the decliners.

With third-quarter earnings winding down and stocks still trading at record levels, investors are also looking to book profits.

Earnings for the quarter are expected to have climbed 8 per cent, compared with expectations of a 5.9 per cent rise at the start of October, according to Thomson Reuters I/B/E/S.

Shares of Nvidia were up 4.4 per cent after the chipmaker’s revenue forecast for the current quarter topped estimates.

Walt Disney rose 2.3 per cent as the promise of a new film trilogy overshadowed weak quarterly results and struggles at the media company.

Hertz Global Holdings jumped 11.2 per cent as the car rental company reported a better-than-expected net profit.

Nordstrom fell 1.2 per cent after its quarterly same-store sales came in below expectations, while JC Penney was up 14.6 per cent after the department store chain reported third-quarter same-store sales that were twice what it had estimated.

Declining issues outnumbered advancers on the NYSE by 1,397 to 1,095. On the Nasdaq, 1,142 issues rose and 1,129 fell. — Reuters